Capitalizing on Overlay

Overlay is a scenario where the guaranteed prize pool (GPP) payout of a contest is greater than the total amount of entry fees paid into the same GPP contest. Basically, if/when this happens, the daily fantasy sports (DFS) site loses money but to the advantage of the players entered into it since the site will pay out more to players than it collected for this contest in this situation.

This is because guaranteed tournaments have a specific prize pool amount that must be paid out, whether or not it is covered by the total amount of the entry fees. This situation may be found in the large GPP tourneys. The larger the tournament the better as the larger tournaments will take longer to fill and hopefully doesn’t fill up. The contests must be guaranteed. That is the key.

The only way to really know if there is an overlay situation won’t reveal itself until the final hour leading up to the start time of the still available GPP tournament. This is when you will see a lot of entries start flooding in with players hoping to take advantage of the potential overlay scenario.

The less entrants, the greater value returned to the entrants in the tournament since there are less players competing over the same prize pool amount. Knowing the total number of entrants allowed and seeing how many entrants there are at that moment, you can project the likelihood of this contest filling up or not. If this particular tournament does not fill up, then there is some degree of overlay.

Expected Value (EV) is an amount you expect to receive on your investment. This value will vary depending on the entry fee, type of contests (50/50s vs. large tournaments) which affect your odds of cashing, and your perceived skill level. Whatever you determine your EV to be, it would then increase in an overlay scenario.

To find a potential overlay scenario, just look for the following info in the lobby of a DFS site identifying guaranteed tournaments:

– Maximum number of entrants allowed.
– The number of entrants already joined.
– Entry fee for this contest
– GPP amount.

The formula for calculating the overlay amount at any point in time is simply:
GPP amount – (# of entrants actually joined X entry fee) = Overlay amount
Keep in mind, the reality of trying to calculate an overlay amount is really just an estimate, especially with lower entry fee/large size tournaments (assuming the # of entrants will be changing by the minute or second in the final hour).

The high stakes entry fees may be different as entries for these tournaments may not drastically increase by the minute in the final hour. The whales are usually in or not by this time. Perhaps considering if they want to add additional lineups or not but the pace of the “flooding of entries” scenario shouldn’t be the same as the large lower entry fee tournaments.

For example, the following is a simple hypothetical tournament (contest #1) to calculate EV and overlay:

Maximum # of entrants – 1,500
GPP amount – $13,500
Entry fee – $10
Cash amount to each winner – $75
Number of players who can cash – top 180
You are an average player relative to the field.

So, assume this contest completely fills with 1,500 entrants. Your odds of winning would be the number of winners divided by the number of entrants. In this case, 180/1500 = 12%. EV would then be calculated by multiplying your odds of winning by the cash prize for each winner. In this case, 12% X $75 = $9.

To factor in overlay, let’s assume the actual number of entrants was 1,300. Your odds of winning increase to 13.84% (using the same odds formula above, 180 winners/1300 entrants = 13.8%). Then your EV would now increase to $10.38 (13.8% X $75 = $10.38). The value of the overlay is $1.38 ($10.38 – $9).

Let’s compare this result to another hypothetical tournament (contest #2) with a different entry fee:

Maximum # of entrants – 2,000
GPP amount – $36,000
Entry fee – $20
Cash amount to each winner – $200
Number of players who can cash – top 180
You are an average player relative to the field.
Actual number of entrants – 1,600

To calculate our odds, 180 winners/1,600 entrants = 11.25%. And now to calculate our EV, 11.25% odds X $200 prize = $22.50. At this point, our first contest has an EV of $9 and the second contest has an EV of $22.50, but which of these two scenarios returns the better value?

Let’s get a percentage relative to the two entry fee amounts, so we divide $10 (entry fee of contest #1) by $20 (entry fee of contest #2) to get 50%. Then multiply this entry fee percentage (50%) by the higher entry fee EV amount ($22.50) and this equals $11.25.

Now we compare the EV of $11.25 from our second contest to the EV of $10.38 from our first contest, and now we can see the second contest returns a better value.

Calculating EV in overlay scenarios can help you select which GPPs to enter versus others.

To filter down to just guaranteed contests on DraftKings.com, select the Guaranteed tab in the lobby.

For FanDuel, select the Tournament button, and all the guaranteed tournaments are identified by the blue “G” symbol.

When targeting potential overlay contests, have your lineups complete and ready to go, and watch the entrants within the last hour. If the overlay looks good to you, get in and good luck!